Property- Policy Provisions and Contract Law Flashcards
All of the following statements regarding concealment are false EXCEPT:
A. If concealment is suspected, the burden of proof is on the insured
B. Concealment involves answering a question without intent to defraud
C. Concealment is never grounds for rescission of a policy
D. Concealment is the failure to disclose any material fact.
Answer: D
An insurance company owned by its policyholders, who receive a return of unused premiums in the form of policy dividends, is a(n): A. Assessment insurer B. Fraternal insurer C. Mutual company D. Stock company
Answer: C. Mutual company
Failure to disclose known facts when filling out an insurance application is an act of: A. Impersonation B. Estoppel C. Concealment D. Aleatory action
Answer: C. Concealment
In which company may policyholders receive policy dividends when there is a profit? A. Stock B. Mutual C. Assessment D. Service
Answer: B. Mutual
In the formation of a legal contract, each party must give something of value. Under contract law, this is referred to as: A. Adhesion B. Agreement C. Indemnity D. Consideration
Answer: D. Consideration
Consideration is defined as the exchange of values.
When a property insurance applicant makes a statement on an application that becomes part of the contract and includes a promise by the insured, the statement is considered to be a: A. Waiver B. Warranty C. Representation D. Condition precedent
Answer: B. Warranty
Which element of an insurance contract requires that the insured have the legal capacity to make a contract? A. Competent parties B. Legal object C. Consideration D. Agreement
Answer: A. Competent parties
Each of the following elements is necessary for formation of a legally valid contract EXCEPT: A. Competent parties B. Signatures of each party C. Agreement D. Consideration
Answer: B. Signatures of each party
All of the following statements are true about a representation EXCEPT:
A. Representations are sometimes given orally
B. It usually appears in an application
C. A representation of a fact is the same as an expression of opinion
D. A policy is usually voided if a misrepresentation is of a material fact
Answer: C
Which of the following would not be covered by the Terrorism Act? A. CGL B. Health insurance C. Surety insurance D. Worker's compensation
Answer: B. Health insurance
In which company may stockholders share in the profits and losses of the insurer? A. Assessment B. Service C. Mutual D. Stock
Answer: D. Stock
Stockholders may receive dividends from the shares of stock they own in a stock company.
